Hogs
Price action: December lean hogs rose 35 cents to $77.175, nearer the session high and hit a 4.5-month high.
Fundamental analysis: Some more chart-based buying interest from the speculators was featured in the lean hog futures market today, as prices continue to trend higher. Gains today were limited by weaker cash hog market fundamentals.
The latest CME lean hog index is down 57 cents to $84.26 as of Oct. 4. Wednesday’s projected cash index price is down another 4 cents at $84.22. The national direct five-day rolling average cash hog price quote today is $74.02. The noon report today showed pork cutout value down $1.24 to $94.81, led by losses in bellies. Movement at midday was good at 198.19 loads. October is national pork month and retailers are likely featuring pork cuts more at the meat counter.
December lean hog futures are trading well above last winter’s seasonal low, suggesting traders anticipate less of a seasonal downturn in hog prices late this year, but still some pressure seems likely this fall.
Technical Analysis: The lean hog futures bulls have the overall near-term technical advantage. A six-week-old price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close December prices above solid chart resistance at the April high of $79.60. The next downside price objective for the bears is closing prices below solid technical support at $72.50. First resistance is seen at $78.00 and then at $79.00. First support is seen at this week’s low of $75.775 and then at $75.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all soymeal needs covered in the cash market through October. You are hand-to-mouth on corn-for-feed.
Cattle
Price action: December live cattle futures climbed 85 cents to $187.875 and settled on session highs. November feeder cattle futures firmed $1.15 to $250.30, nearer session highs.
Fundamental analysis: Cattle futures marched higher today, scoring a fresh for-the-move high in fats. Cattle futures climbed today despite weaker outside markets that saw heavy selling in crude oil futures and a weaker corn and soy market. Calendar spreads for fats currently anticipate a short-term top soon in the cash market before prices dip into December. That weakness is expected to be short-lived, as late winter and early spring futures are trading at premiums to both the October and December contracts. Still, the robust strength seen in December live cattle futures, which have maintained a tidy uptrend since early September, shows little sign of stopping soon. Bulls were encouraged by continued strength in Choice beef, which is up another $1.09 to $307.02. Select cutout dipped 18 cents to $289.15 at midsession. Movement totaled 67 loads this morning.
Feeders built on yesterday afternoon’s strength throughout today’s session. Weaker feed prices supported feeder prices today, as has the rebounding feeder cattle index. After languishing sideways for nearly two months, the feeder cattle index, most recently quoted 70 cents higher to $247.48, has begun to trend higher. Traders anticipate that bullish trend continuing into November before dipping into the new year, similar to fats futures.
Technical Analysis: December live cattle futures climbed to a fresh high today as bulls retain the near-term technical advantage. Bulls next objective is overcoming resistance at $188.00, which is backed by the July 26 close of $189.30, then the July 5 high of $190.075. Meanwhile, support comes in at yesterday’s low of $186.55, which coincides with uptrend line support. A break below that mark eyes the 10-day moving average at $185.85.
November feeder futures continue to march higher on the daily bar chart as bulls maintain the near-term technical edge. Prices are currently in the Aug. 1 to Aug. 5 pricing “vacuum” where futures were in freefall. A test of resistance at $255.0, the upper end of that range, is likely, with resistance at $253.20 on the way. Support comes in at $248.55 then the 10-day moving average at $246.90 on a reversal lower.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have all soymeal needs covered in the cash market through October. You are hand-to-mouth on corn-for-feed.